An analogy would be if person A and person B conducted a transaction by converting their money from dollars to euros or vice versa (assuming A and B are both in the same country). Depending on the current exchange rate, this could be a good or a bad thing for both of them. If the dollar is weak, both parties stand to lose. If the dollar is strong then it won't last because the market will quickly be flooded with people trying to get in on the deal.
There is no way of controlling or predicting the bitcoin exchange rate. If I send money to someone in my country with paypal they are going to whack me with fees, but at least I know what the fees will be in advance. I can plan on it as a business. Having to deal with an unknown and uncontrolled exchange rate just doesn't sound fun. This is assuming that bitcoin stops having wild price swings over time and stabilizes to the level of established global currencies.
It just doesn't make sense to perform a currency conversion when transferring money to someone who uses the same currency as the sender. This article was amazing and pmarca opened my eyes to uses of bitcoin that I never would have imagined. But the only thing I can't imagine is this new currency living up to the utility that is expected of it.
Bitcoin the protocal, however, is freaking awesome. I expect to see a lot of startups taking advantage of some of the non-monetary uses, up to and including micropayments. It could be a very long time before bitcoin paychecks are mainstream. But electronic transactions of all kinds are going to be getting easier soon.